Thursday, September 25, 2008

House Bill Would Increase LIHEAP Funds: Will New York Use them to Reform its HEAP Program?

The federal LIHEAP program funnels federal aid to New York's Home Energy Assistance Program (HEAP). For years LIHEAP appropriations have been in the neighborhood of half the authorized level of $5.1 Billion. At that level the program would provide inflation-adjusted benefits roughly equivalent to the program's 1981 level. This year, with incomes stagnating and home energy prices skyrocketing, President Bush proposed a lower level of funding for LIHEAP. See President Bush Proposes LIHEAP Funding Cut in 2009 Budget.

Congress now appears ready to fund the program at the $5.1 billion level. See House Votes to Nearly Double Federal Home Heating Assistance for this Winter. It is not yet clear how much more would be received by New York State, due to the intricacies of LIHEAP funding formulas. Sen. Schumer, who championed higher appropriations in the Senate, has estimated that New York will receive $476 million. See Schumer: NY Likely to Get Nearly $500m in Heat Aid.

This year's state plan for HEAP was written by OTDA with a substantially lower level of anticipated funding. It remains to be seen how New York will use the additional funds this winter to address the home energy needs of low income households. PULP, in its comments on the HEAP plan, stressed the need for more public input on how to use increased funding.

Even with an infusion of additional federal funds for HEAP, there will be major problems ahead. Benefits have been reaching only about one-third of the households eligible for HEAP, the benefit levels have been low, and the program design needs improvement.

In particular, the duties of utilities when they receive a HEAP payment need to be shored up, to assure that "regular" HEAP benefits are applied primarily to reduce this winter's bills (and not old bills), and to assure that "emergency" HEAP benefits actually resolve emergencies, rather than merely postpone them thirty days. Policies of OTDA and the PSC have been allowing utilities to use "regular" HEAP payments for old bills from prior years that are in abeyance, rather than applying them to charges for the immediate winter season, and to repeatedly shut off customers who receive "emergency" HEAP, for the same arrears. "Regular" HEAP is intended to address immediate home energy needs, and "emergency" HEAP must be designed to "resolve" emergencies.

In addition, there is a significant segment of the population with incomes slightly above the HEAP income eligibility level (which is 60% of the state's median income), that will experience great hardship this winter due to the much higher energy bills. The state Assembly has proposed measures to protect such households.

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